Inherited and acquired diseases of the neural retina (NR) and/or retinal pigment epithelium (RPE) are a significant issue in human health and quality of life. Stepwise retinal differentiation of human pluripotent stem cells (hPSCs) can provide a model system to study human retinal development and supply cells for the potential treatment of debilitating retinal diseases. We have shown that two types of hPSCs, human embryonic stem cells (hESCs) and human induced pluripotent stem cells (hiPSCs), can differentiate along the retinal lineage in a manner that closely parallels normal human retinogenesis. However, little is known about the factors and events that influence key steps in the differentiation of these cell types from hPSCs. Our long-term mission is to define molecular mechanisms of retinal cell fate determination from hPSCs and apply this knowledge to the study and treatment of human developmental and degenerative retinal disorders. An important step in vertebrate retinogenesis occurs during the optic vesicle (OV) stage, when cells make the seminal decision to develop either as a neural retinal progenitor cell (NRPC) or an RPE cell. VSX2 is the earliest known marker of NRPCs and is hypothesized to pattern the naove OV into the NR and RPE domains by repressing expression of the early RPE-associated gene MITF. Disruption of Vsx2 expression in animal models by various means causes severe defects of the eye and retina, and humans with mutations in this gene exhibit microphthalmia and malformed retinas. Despite the critical roles attributed to VSX2 during retinal development, there is scant information available on its mechanisms of action and regulation in humans. Our unique capability to culture human cell populations from the earliest stages of retinogenesis and to isolate OV- like structures provides a pertinent in vitro model system to study VSX2 function in human retinal cell development. The primary objectives of this proposal are to a) determine the purpose and necessity of VSX2 in the initial production of retinal cell types from hPSCs and b) identify endogenous hPSC signaling mechanisms that control VSX2 expression during differentiation. Experiments are designed to investigate the overall hypothesis that VSX2 expression in hPSC-derived retinal cultures leads to maintenance of a proliferating pool of NRPCs at the expense of RPE. To test this theory, we will pursue the following specific aims: 1. Determine the gene regulatory roles and mechanisms of VSX2 during the early production and proliferation of NRPCs in differentiating hPSCs. 2. Define the ligands and pathways that mediate the reciprocal effects of FGF and TGF2 signaling in the regulation of early VSX2 expression in differentiating hPSCs. 3. Determine the effects of a naturally occurring, human VSX2 mutation on the establishment and expansion of NRPC vs. RPE cell populations using patient-derived hiPSCs.